Jack’s customers jumping for joy?
Tesco have recently opened their latest endeavour Jack’s, trying to compete with the giants of discount retail, Aldi and Lidl. It is yet to be seen when this new store format will be brought to NI and if it will survive.
Tesco’s new tactic to super shopper savings comes in the form of their new store Jack’s, named after founder Jack Cohen.
The new approach from the retailing giant, celebrating 100 years in business, has been teased for some time now and many have wondered if this is a viable approach.
Discount retailers such as Lidl, and Aldi on mainland UK, have increasingly gained market share, around 13.1 percent, over the last few years, and with this gained brand loyalty.
Whilst Tesco still sails out in front with the majority of overall market share, just over 30 percent, it has been steadily decreasing over the years as consumers change shopping habits.
Tesco said it is aiming to open 10-15 Jack’s stores next year. While a typical large Tesco supermarket sells more than 25,000 products, Jack’s will stock only 2,600.
The new chain is a bid to win back shoppers lost to the discounters, who now account for more than £13 out of every £100 spent in UK supermarkets – twice as much as five years ago.
Five of the new shops will be created by repurposing properties already owned by Tesco, including some Tesco Metro stores. None of these properties have been said to be in Northern Ireland, so, for now, this will be a mainland UK project.
Dave Lewis, Tesco group chief executive has been optimistic about the launch and the newly implemented low-cost business model, stating it will be the “cheapest in town.”
“It’s fitting that today, we mark the beginning of Tesco’s celebration of 100 years of great value by launching a new brand, and stores bearing his name: Jack’s,” said Dave.
Dave went on to explain that eight out of ten products would be grown, reared or made in Britain, showcasing the consumer want for local.
The newest success?
Whilst many have been quick to look at the store as a way to bolster Tesco market share, little has been said of the negative impact this could have on the more exclusive stores.
If Jack’s becomes successful and changes Tesco consumer habits, why would they ever swap back to Tesco, the more expensive of the two?
Whilst Tesco will offer a more extensive range of infrequently purchased products, electrical etc., shopper’s weekly basket shop could quickly switch to Jack’s.
This could see a decline in the overall usage of the normal Tesco store format, which could become damaging.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, has stated that optimism should be sceptical, due to the increasing popularity of brands like Aldi and Lidl, and the loyalty they can amass.
“There have been plenty of comparisons to Aldi and Lidl and it’s worth remembering that despite their ‘discounter’ moniker they aren’t particularly downmarket retailers,” said Fraser.
Fraser concluded that, “they [consumers] spend just £1 in every £10 there and don’t shop at the discounters as frequently as at the big four – given the Jack’s model is so similar we would expect to see shoppers behaving the same way in its stores.”
Fraser alluded to the fact that it is difficult to compete with the in-place discount retailer, a fact made clear with previous attempts.
Sainsbury’s previous attempts to compete by popularising Netto ended after only two years of trading due to rapid expansion and investment needed.
Whilst Tesco have a rather large market share and could potentially back a rapid expansion, it would appear that they have not learned from the Netto incident.
The plans for 60 stores in the next six months, or so, isn’t a huge number compared to the estimated 1,300 Aldi and Lidl stores, and Tesco may struggle if they do not close the gap quickly.
What have customers said?
With the first Jack’s opening in Cambridgeshire, it had mixed sentiments. Speaking to the Guardian online, several customers were cynical of the new store, with some coming for the free Jack’s shopping bag, and leaving straight away.
Some shoppers said they felt the shop felt out-of-date, whilst another reportedly said, “We thought about going down there, but Aldi’s are our store and I think will be sticking with it. It’s done us well over the years and I see no reason to abandon it now.”
Others have been positive about the store and the long queues were testament to this; however, it would appear due to the slow expansion plans, Northern Ireland will not be seeing any form of change in Tesco store format in the near future.